Audit: DDA failed to collect nearly $119 million after shift to new payment system

by Danielle J. Brown, Maryland Matters
June 24, 2025

The Developmental Disabilities Administration failed to collect almost $119 million in provider payments in a timely manner, despite a new payment system that’s supposed to improve the agency’s financial forecasting, a new audit says.

The payments were made to providers to help them during the transition to the new payment system, with the expectation that those dollars would be returned to the DDA. But more than 100 providers have struggled to return the payments, and as of January a total of $118.8 million was still outstanding.

Auditors believe the agency should have worked faster to recover those payments, just one of the findings in the legislative audit released Monday that found issues with oversight and financial record-keeping at an agency with an already precarious fiscal outlook.

Laura Howell, CEO of the Maryland Association of Community Services, said she wasn’t surprised there were outstanding payments.

“When you transition from one complex system to another complex system – things happen,” Howell said. “Some providers, I think smaller providers, have struggled with that repayment … They’ve (state officials) allowed for a repayment plan, and we think that is a good thing.”

The audit evaluated aspects of DDA operations from June 2021 through April 20, 2024, spanning the transition from the Hogan to the Moore administration. Several concerns identified in the audit have been cited since 2009, but state auditors said in the latest report that they believe the agency is moving in the right direction.

How did we get here?: Analysts, officials unsure how disability agency overspent

One of the issues identified in the audit was a yearslong transition into a new schedule for how the state pays developmental disabilities service providers.

The DDA had used a prospective payment model — providers were paid in advance and costs were reconciled later. But in 2019, it began moving to a fee-for-service model, called the Long-Term Services Support System, that reimbursed providers after services were delivered.

Most providers switched to the new payment model in 2023 and 2024, and all were using the fee-for-service payment model by last September..

During the transition, providers were given prospective payments to get them over the hump, with those payments to be eventually returned to the state. That didn’t happen, the auditors said.

“DDA transitioned providers from the prospective payment to the fee-for-service (FFS) model during the period from December 2019 to September 2024. As a result, any prospective payments that were still outstanding needed to be recovered from the providers,” according to the audit. “Specifically, DDA did not start invoicing providers for the amounts due until February 2024, despite transitioning certain providers as early as December 2019.”

The audit also found that there was not enough information on how long those debts were outstanding – so it is not clear how much of the debts should be turned over to state debt collectors. State regulations “require three written demands for payment made at 30-day intervals” before a debt can be sent to the state’s Central Collection Unit.

The audit also said the DDA was not ensuring that people with developmental disabilities received required annual updates to their service plans.

In fiscal 2022 and 2023, the audit found, more than 1,500 people who received disability services were a year or more overdue for monitoring visits that are supposed to occur quarterly. Those visits help ensure that people are receiving adequate care and supports for their disabilities. More than 8,900 people were missing at least one required quarterly monitoring visit during that time.

In its response to the audit findings, the Department of Health, which oversees the DDA, said it was in the process of enhancing oversight of organizations tasked with conducting the quarterly face-to-face visits and the annual updates to individual service plans.

As for the outstanding payments, the department reported this month that approximately 105 providers still owe the DDA money. The department is giving those providers a chance to set up a payment plan to settle their debt. If they do not, their accounts are sent to state collections.

The department also plans to release a report and summary on the timeline of anticipated collections by September 2025.

Despite the challenges outlined in the report, state auditors believe department’s responses should be “sufficient to address all the issues.”

A written statement from the health department said that it is “encouraged by the improved accountability and compliance level rating of the latest Developmental Disabilities Administration (DDA) Office of Legislative Audits (OLA) audit.”

“At the same time, we acknowledge that there are still improvements to be made as outlined in the audit responses. We will continue to work on procedures on all levels of DDA operations, including the areas of procurement and oversight procedures,” the statement said.

Howell said she appreciates that the department is making moves to ease the complexities at the DDA.

“The Developmental Disabilities Administration is an incredibly complex administration, with a very complex rate system that has gone through an extraordinary amount of change in the last six years,” she said. “I think DDA is working really hard to improve how they are managing the complexity, how they are managing the finances.”

Maryland Matters is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Maryland Matters maintains editorial independence. Contact Editor Steve Crane for questions: editor@marylandmatters.org.